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Circumvention of trade remedy measures is one of the most commonly investigated and applied trade remedy measures to Vietnam in 2022. In the following article, ASL LAW will point out the basic knowledge in the field of anti-circumvention of trade remedy measures in Vietnam, considering the situation that this measure is becoming more and more popular in the field of trade remedy in Vietnam in particular and the world in general.
Acts of circumvention of trade remedies in Vietnam
Clause 1, Article 72 of the Law on Foreign Trade Management 2017 stipulates: “Circumvention of trade remedies means actions aiming to evade partial or total obligations to enforce the valid trade remedy imposed on products subject to these measures when being imported to Vietnam.”
Basically, trade remedy circumvention is the act of changing the origin or type of goods to avoid trade remedies being applied to enterprises in a certain country, thereby reducing the effectiveness of these measures.
In case the investigating authority determines that there is an act of circumvention of trade remedies, the trade remedy measure being applied may be extended based on the results of a separate investigation into the circumvention of trade remedies.
Quite similar to the anti-dumping investigation requirements, the investigation agency can conduct an investigation of trade remedy circumvention based on the request of the representative of the domestic industry or following the information obtained by the investigating agency.
Based on the investigation agency’s conclusion, the Minister of Industry and Trade of Vietnam shall issue a decision on the application of anti-circumvention measures against trade remedies to goods and components imported from the investigated countries.
Common trade remedy circumvention measures
Common trade remedy circumvention measures include:
• Acts of circumvention of trade remedies through manufacturing and assembling in Vietnam
• Acts of circumvention of trade remedies through manufacturing and assembling in a third country
• Acts of circumvention of trade remedies through insignificant changes of goods subject to trade remedies
Acts of circumvention of trade remedies through manufacturing and assembling in Vietnam
The act of circumvention of trade remedies through manufacturing and assembling in Vietnam is when raw materials, components or supplies originating from the country subject to Vietnam’s trade remedies are imported into Vietnam with the main purpose of producing goods subject to trade remedies, thereby circumventing trade remedy duties.
An important factor in determining the act of circumvention of trade remedies through production and assembly in Vietnam is that raw materials, components or supplies originating from the country subject to the trade remedy measure account for at least 60% of the total value of raw materials, components or supplies for the production and assembly of goods subject to trade remedies in Vietnam.
Acts of circumvention of trade remedies through manufacturing and assembling in a third country
Similar to the import of raw materials into Vietnam for production and assembly in order to evade trade remedy duties, the act of importing materials for production and assembly in a third country is the act with the purpose of circumvention of Vietnam’s trade remedy measures through production and assembly in a third country.
In which, it is necessary to determine that the export price of goods from a third country to Vietnam is lower than the normal price of the goods subject to initial trade remedy investigation.
In addition, raw materials, components, or supplies originating from the country subject to trade remedy measures must account for at least 60% of the total value of materials, components, or supplies of the goods exported to Vietnam.
Basically, enterprises in the country subject to trade remedy duty by Vietnam will transport raw materials subject to trade remedy duty to a third country, such as China. Then, the partner enterprises in China will assemble the materials subject to the trade remedy into finished products and then export them to Vietnam.
The above and similar acts are considered acts of circumvention of trade remedies through production and assembly in a third country.
Acts of circumvention of trade remedies through insignificant changes of goods subject to trade remedies
Circumvention of trade remedies through insignificant changes of goods subject to trade remedies is when enterprises export products with changes in names and other factors to Vietnam. However, these changes are not significant, there is no difference in nature, not a new type of product.
Article 78 of Decree 10/2018/ND-CP stipulates that a negligible difference is determined when there is almost no difference between imported goods and goods subject to trade remedies, in particular relating to intended uses, distribution channels, and costs.
Article 77 of Decree 10/2018/ND-CP stipulates that the act of circumvention of trade remedies through insignificant changes of goods subject to trade remedies is determined when all following conditions are satisfied:
– The volume and quantity of imported goods described in Clause 3, Article 73 of Decree 10/2018/ND-CP increased significantly compared to the volume and quantity of imports of goods subject to trade remedies into Vietnam by manufacturers and exporters;
– The volume and quantity of imported goods described in Clause 3, Article 73 of Decree 10/2018/ND-CP increased significantly, immediately before or since the date the Minister of Industry and Trade decides to investigate.
Regulations on investigation and application of measures to prevent circumvention of trade remedies
Article 83 of Decree 10/2018/ND-CP stipulating the application of anti-circumvention measures of trade remedies provides for procedures for investigation and application of measures to prevent circumvention of trade remedies:
– Within 15 days after the investigating agency sends its final conclusion, the Minister of Industry and Trade shall issue a decision to apply or not to apply anti-circumvention measures.
– In the case of a decision to apply anti-circumvention measures, the effective trade remedy measures will be extended to apply to each producer and exporter of goods identified as having evaded trade remedies.
– The time limit for the application of anti-circumvention measures shall terminate when the original time limit for the application of trade remedy measures expires.
ASL LAW is the top-tier Vietnam law firm for Anti-dumping & countervailing. If you need any advice, please contact us for further information or collaboration.
